Large industries and tech giants often take up too many projects at once. Some of them might have just started, some are at the testing phase, and some might be ongoing. All of these contribute to the portfolio of a company.
Managing all these diverse projects at once is not easy. Especially when some or most of them are intertwined. If they are from the same client, or use the same resources, allocating them wisely and distribute the focus to generate maximum ROI while adhering to their business goals is a huge task.
Also, not all the projects that are offered to the company are worth taking up, and some of them need to be on hold for some time, so some really important projects can progress.
So only managing them on a project-level is not enough. A team should be dedicated who can judge all the projects and help the organization achieve its target revenue and also satisfaction and goodwill. Project portfolio management is all about it.
What is Project Portfolio Management?
Project portfolio management is a centralized management process of its portfolios in a strategic manner so the company can meet all its objectives and goals.
According to this project portfolio management definition, it is a process where we can manage all the interrelated, connected, and dependent projects of a company. It gives us the big picture of what the company has to complete, and contains all the details of its ongoing and upcoming projects.
The companies use this technique to achieve their long term objectives and maximize the return by carefully calculating which projects to prioritize and how to sequence them. The project portfolio management process steps bases on realistic calculations and researches. It helps to decrease the gap between what is strategized and what is implemented.
The main focus of PPM is to increase the value of the company. Every organization works intending to meet from their overall portfolio. And the projects and programs have to meet the long-term target. Some of them help to continue cash flow, some are innovative, and some helps to boost the revenue of the company. According to the objective, current status, and also the resource and cost the company can afford at the moment, the strategies need to change. Otherwise, the overall balance of the organization can disrupt. A project portfolio management software helps the professionals to have a glance at the holistic state of the company. It lets them have a visual representation, and it eases the strategy-making by charts and other tools.
In short, project portfolio management helps to ensure the organization can leverage project selection and resource distribution for its best interest in the future.
What is a Project Portfolio Management Software?
Let us discuss more about the project portfolio management software now.
A company can have tens of ongoing projects at once, even more. Each of the projects has its team and methodologies. So a portfolio manager cannot track all of them manually. Even creating the visual chart with the current status of the projects becomes increasingly difficult. The PPM tools come in handy in these cases.
Portfolio management software can be both online and offline. The online software or SAAS (Software as a service) is preferred as it is easy to collaborate and adjust the data of all the ongoing projects online, rather than putting them manually for each one. The online software comes with a subscription plan, and all the associated members can have this version. While installing licensed and authorized offline software can cost a lot to the company. Online software also makes it easy to send a file or selected data to another device.
These tools analyses and optimize the process, method, and technology of the projects as a centralized management system.
Here is a list of the best project portfolio management software list for you. You can check all the respective pros and cons of the software to see which one fits your purpose and budget.
What is the difference between Project Management, Program Management and Project Portfolio Management?
If you have come across the term project management, and program management- chances are, you are starting to get confused about the terms. Let me explain the relationship between project, program, and portfolio management to you.
In a business management hierarchy, all these three terms stand in different steps.
A project is a temporary intuitive a company takes up to have a specific set of the outcome. The project manager divides it into tasks, milestones, and has a predestined roadmap, different for each methodology it can follow.
A collection of interrelated projects are called a program. Here the clients the company is collaborating with may be the same. Or the resources might be common. So the company cannot treat these projects as entirely separate entities as they have a fixed amount or source of resources, and they need to distribute them effectively to gain the maximum value. A program manager has to decide which project to prioritize when such a collision occurs.
And a portfolio is a collection of all the projects a company has currently taken up. Project portfolio management is about managing the entire workload and expectations of the company. A portfolio manager has to keep in mind the ultimate goal of the company while selecting and sequencing the project with the help of project management software.
So a program is a subset of a portfolio, and a single project is the subset of the program.
Project Management vs Project Portfolio Management
Project portfolio management links project management to enterprise management, as in the vision, mission, and strategy of the organization. The whole PPM orchestrates and prioritizes the potential value of many projects. Project management is all about setting and achieving milestones, assigning resources, budgeting, and cost management in a single undertaking.
Project portfolio management vs program management
The projects under a program focus on the same business benefits. It boosts business value by choosing the right projects and executing those strategically organizing people across the department. While the PPM offers a high-level view as it counts all the unrelated projects too, for the time, cost, and resource distribution.
Project management vs program management vs portfolio management
In short, all three of them generally remain intertwined. A project portfolio management software accumulates data of all the projects and programs for a primary strategy. A program manager can start working with the program only when the portfolio manager approves it, and a project manager can schedule all the tasks only when the program manager approves the project.
What is the Project Portfolio Management Process?
PPM is generally a lengthy and complex process due to all the conditions it has to meet. There are usually five project portfolio management process steps that all the industries use. Here is how do you build a project portfolio management process-
› Create an inventory and establish strategy:
The first step of implementing the project portfolio management process is to collect sufficient data on all the projects. Then the team members evaluate each of them to check if they suit the business objective and strategy. Then the company forms an implementation team that consists of a governing body, the project managers, technical team, and others. The task of this phase is to-
• Set goals and objective of the company and set a target by risk assessment and ROI estimation,
• Grouping of projects according to costs and resources. Then compare their statuses and reallocate the budget.
• Break up the project to create milestones- so the team can be more driven to finish the project.
• Set dependencies of the tasks and find the critical path.
• View the overall roadmap from the software.
Now the team needs to scrutinize all the strengths and weaknesses of the portfolio. They evaluate all the milestones, Return of investment, planned schedule, and resource allocation of each of the projects. Using the software and tools, they have to-
• Categorize the projects,
• Check for duplication of any parts or the whole projects,
• Find out the best combination of the projects to perform together for the maximized outcome with minimum efforts and distributed budget allocation,
• Calculate the efficiency of the overall risk,
• And find out a way the project teams can communicate well among themselves and collaborate if necessary.
› Ensure alignment:
After analyzing and finding out the critical projects, it is necessary to check those have enough supply of the resources, so they do not need to be on hold. They further have to ensure these projects, and the alignment ultimately meets the company strategies. There are few guiding principles for this step-
• The company should have a balance of the degree to which the portfolio has to be a strategic fit for the company.
• The distribution of projects in the reach department has to align with this strategy too.
• There should be a range of the expected return of the projects must meet. It is to stabilize the cash flow and continue or increase the revenue.
• The team has to properly evaluate the risks associated with the scope, resources, and technology so the company can have an overall balance even if the plan does not go right.
It is about the risk and balance in the portfolio. The company needs to prioritize the projects according to a given situation and allocate the budget and resources. They even need to assess the risk of the overall portfolio and make any change when necessary.
They track the progress of the portfolio and report accordingly to the stakeholders. The company also collaborates with the stakeholders at the task level or the executive level.
› Test and adapt:
This part is ongoing and different for every company at every given time. As the projects, as well as the problems, are real-time.
What are the benefits of Project Portfolio Management?
According to the PMI Pulse of the profession, the organizations who invest enough time and energy to project and portfolio management save up to 28 times of money. Here is the list of project portfolio management benefits-
› Improved project selection process:
All the crucial aspects like the ROI, goals, risk, and resource availability is available to use to check if a project is well-suited for the company or not. They use several qualitative and quantitative techniques like the ranking method, scoring module so the project selection can be worthy and accurate.
› View of the big picture:
The company aligns the projects and create the roadmap in such a way that the long term roadmaps can align with the goals.
› Focus on the business objective and goals:
Having a broader view helps the company to fit and adjust its short term opportunities, long term goals, and innovation, and also boost their financial return. According to statistics, 37% of projects fail for the lack of transparency of long time goals.
› Emphasizing collaboration over the competition:
One of the most prominent project portfolio management advantages is that it prevents competition among the department and teams of the same companies but help them to make the best usage of their employees. They use a meticulous standard approach to leverage mutual teams.
› Efficient use of resources:
26% of executive leaders have reported that unplanned distribution of resources can be a cause of a failed project. As project portfolio management makes room to consider the availability of it at the very beginning and plan accordingly, it can be avoided.
› Accurate project performance data:
PPM ensures continuous monitoring and controlling of the projects. It uses all the nitty-gritty of a project to make a high-level portfolio and helps to assess the portfolio performance and make the necessary changes quickly.
› Accuracy of the time of project delivery:
Any chances of delaying cost overrun, lack of alignment, or unclear requirement are not there as the team has all the necessary data to have the correct assumptions. It can decrease the project lifetime by 10% as it excludes any repetitive governance, workflow and standardization.
› Decreased risk:
The visual and holistic approach gives a clear view of the risk versus return profile. It helps to lay the foundational framework for a strategy that is immune to the common risks.
› Decision making:
Collecting so many data points on a ground-level accuracy is especially helpful to predict the future outcome. The company can look into the portfolio in detail and from too many aspects and constantly questions the status that the final decisions and usually accurate.
› Increased return of investment:
The minute details are helpful to calculate the operational, service, and compliance return beside the financial returns. Trained portfolio managers can add a fortune to the company by making the correct decisions quickly.
• Communication of the insights of the project throughout the hierarchy of the company. This way the company management can get to know if something is wrong with a particular task and take action soon.
• Identify and correcting problems before they occur in a project.
Project portfolio management example
Project portfolio management is useful in several industries like IT and computer software, automobile and construction, insurance, government administration, electronics, and telecommunication, etc. Project portfolio management definition and example can even be realized from a non-technical field too.
Suppose a company has 25 projects. 20 of them are ongoing, while 5 of them are on hold, and the company has another project offers at hand. Ten of the total 30 projects use resource1, and 15 of them need resource2. And 17 of them are from three trusted clients, while the rests are from various other clients.
Now you can easily imagine how difficult it is to manage so many different projects at once. And if they do not use the resources carefully, some critical projects might get drained out of the stored projects. They also need to check whether they can continue the projects that are on hold and check whether the offered projects suits their business motives and increase their value.
All these works become easy once they use a tool where they can evaluate all these project strategies and implement them at once. Project portfolio management does this work for you.
PPM is difficult to implement at the very first, no doubt. But there are so many templates available out there and project portfolio management software with a user-friendly user interface, that once you have grasped the whole concept, it is easy to use that in the future. From forecasting risks, to identify the potential of a project to decide whether to take up that project and how much to prioritize, this method goes into minute details to bring out the maximum benefits for the company and help the organization to achieve the goals.
Project portfolio management is a valuable tool to attract the stakeholders too. Though the processes like resource allocation, compatibility with the company goals, and estimated ROI, also boost the transparency, governance, and accountability of a project. It helps the company to meet its operational and financial goals by keeping a balance in the portfolio.